The retreat of the dollar will impact imports

Economists and businessmen say that remittances and import items will be affected by the decline of the US currency .

Since October 2018, the Mexican currency had not presented a better level. On Monday, according to the data provided by the Bank of Mexico (Banxico), the peso closed at 18.99 units, down from the 19 pesos with which it began in 2019.

This panorama – said the doctor in Jéssica Economics Yanet Soto Beltrán – is due to internal and external factors that affect the economy, such as cash flows or foreign investment, so the international elements will hit the markets in process of development:

“Mexico is an emerging economy, and when there is instability [sic] in international financial markets, these are affected because investors tend to focus on countries where their resources are more secure and have greater support, as in developed countries.”

In this order of ideas, the economist and political scientist Rajid Luna Cruz explained that since the dollar is the world economic reference, all the factors that harm the United States, such as the exit of the United Kingdom from the European Union (brexit) or the closure of the Government on the part of President Donald Trump, will be directly manifested in the monetary affairs of the American Union. 

The risks

That the dollar goes down, Luna said, will make the Mexican Republic more attractive abroad, since the products will be cheaper; however, there will be sectors that will not see benefits with the decrease, such as remittances from abroad:

“For a dollar, they will give you fewer pesos, that means that a buyer does not occupy so much money to obtain a dollar. For remittances, which are extremely important for Mexico, it will impact because they will receive fewer pesos for each dollar. There will be winners and losers in the country.

In this tenor, the investment mechanisms that would be gaining ground would be those with lower risk, such as the Cetes (debt papers issued by the federal government that guarantee the return of the initial resource plus a certain margin of profit).

“On the other hand, if you bet on investing in the stock market, you buy shares in 40 pesos, tomorrow they appear worth 38 and lose two pesos. People are betting on investing more in bonds, this sector will experience price growth, they do not invest in the stock market: they will have lower but guaranteed yields ». 

Likewise, Rafael Nieto Tostado, national adviser of the Canaco, stated that the cost of import items (electronics, telephony, auto parts, clothing, etc.) could rise:

“There is a dependence on globalization that we have become accustomed to, and it is the right thing to do. It is a breath before the situation that is lived. The center of the country is collapsed and prices are beginning to increase. Let there be a more accessible dollar help. 

Ultimately, Nieto Tostado stressed that the price of the dollar will fluctuate, so he saw the stabilization of the peso far away: “Everything is in suppositions. Many things happen. There is some uncertainty.

Source: El Debate

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